The Energy Transition in an Era of Low Fossil Fuel Prices

Summary

Nearly all countries around the globe have now firmly committed to reducing their greenhouse gas emissions through the Intended Nationally Determined Contributions (INDCs). The post-COP21 agenda now focuses on the implementation of these INDCs. At the heart of that implementation is the so-called energy transition, which consists of moving away from using fossil fuels (petroleum products, natural gas, and coal) and toward clean energies to power the global economy. While the energy transition is arguably at an early stage, with important differences across countries, it is at a critical juncture. Indeed, to avoid the irreversible consequences of climate change induced by greenhouse gas emissions, the energy transition must firmly take root at a time when fossil fuel prices are likely to stay low for long. It involves significant opportunities and risks, which energy policies will need to tackle.